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Tricky

Tricky
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  • Forget the S&P downgrade, markets tonight may be chewing over a Der Spiegel story saying doubts are growing in the German government that Italy can be rescued, even if the bailout fund was tripled. Additionally, there are worries a move to guarantee all of Italy's €1.8T of sovereign debt might have markets beginning to question Germany's solvency.  [View news story]
    Well alright then, let's do some analysis. Italy's debt is approximately equal to 75% of German GDP. So the German populace is going to quietly sit by as their government guarantees Italy's debts, in order to keep its exporters happy. You're acting as if there is no price to bailing out Italy. It would be an enormous price.

    Oh, and if Germany pulls out, there is probably no EU to talk about any more.

    I have no idea how the German populace will act. But I did see what happened to Merkel's governing coalition in a few major regional elections, after the Greek bailout. So I guess we'll find out just how badly Germany wants to keep this Euro-experiment going.
    Aug 7, 2011. 12:57 PM | 1 Like Like |Link to Comment
  • Forget the S&P downgrade, markets tonight may be chewing over a Der Spiegel story saying doubts are growing in the German government that Italy can be rescued, even if the bailout fund was tripled. Additionally, there are worries a move to guarantee all of Italy's €1.8T of sovereign debt might have markets beginning to question Germany's solvency.  [View news story]
    Can't help but wonder if/when the German voters start a backlash. It's one thing to bail out Greece. But Italy? GNP figures

    Germany 3316B
    Italy 2051B
    Greece 305B

    Germany is going to bail out a country almost 62% its own size? OTOH, they may have no choice, given what their banks must be holding in Italian paper. Good heavens, what a mess.
    Aug 7, 2011. 09:35 AM | 3 Likes Like |Link to Comment
  • Italian prosecutors confirm an investigation of Moody's and S&P, saying recent moves by the agencies are a "failure" of judgement about Italy's finances. Investigators have seized documents from the offices of both firms, with 3 Moody's analysts and 1 S&P analyst being the focus of the probe.  [View news story]
    Italy must REALLY be worried if it is resorting to these kinds of intimidation tactics. No wonder it wants a more compliant Europe-based rating agency.
    Aug 4, 2011. 03:06 PM | 2 Likes Like |Link to Comment
  • House Majority Leader Eric Cantor says it's time for Americans to "come to grips with the fact that promises have been made that frankly are not going to be kept for many," and young people must "adjust" to a future with fewer entitlements. Straight talk for a change, or a betrayal?  [View news story]
    The other massive structural problem with SS is that it was set up as a pay-as-you-go financing (current workers fund the retirees) rather than a true retirement plan where my contributions fund my SS payouts.
    Aug 4, 2011. 08:50 AM | 2 Likes Like |Link to Comment
  • House Majority Leader Eric Cantor says it's time for Americans to "come to grips with the fact that promises have been made that frankly are not going to be kept for many," and young people must "adjust" to a future with fewer entitlements. Straight talk for a change, or a betrayal?  [View news story]
    The problem with social security is that it never got adjusted for life expectancy. Its purpose was to mitigate poverty in the last years of an American's life, not to ensure them decades of being economically unproductive.
    Aug 3, 2011. 07:11 PM | 4 Likes Like |Link to Comment
  • The ink isn't quite dry yet on the debt ceiling deal before the Geithner-replacement rumors start up again. Buried in the details of a MF Global bond deal is a kicker the interest rate on the firm's issue jumps 100 basis points if CEO Jon Corzine nabs the top job at Treasury.  [View news story]
    Beat me to it
    Aug 3, 2011. 11:26 AM | 1 Like Like |Link to Comment
  • The debt-ceiling deal passes the House, 269-161. The plan is a two-stage raise of the debt ceiling by $2.4T while cutting spending by about $2.7 trillion over 10 years. The Senate may begin debate tonight but is likely to vote on the deal tomorrow. (MW) Updated: The Senate will vote at noon tomorrow.  [View news story]
    Yep. Incredible hypocrisy. It's simple math -- unless you do something about ALL of the Big 3 (SS, Medicare, DoD), you don't fix the US financial problems -- everything else is window dressing
    Aug 1, 2011. 10:48 PM | 2 Likes Like |Link to Comment
  • The debt-ceiling deal passes the House, 269-161. The plan is a two-stage raise of the debt ceiling by $2.4T while cutting spending by about $2.7 trillion over 10 years. The Senate may begin debate tonight but is likely to vote on the deal tomorrow. (MW) Updated: The Senate will vote at noon tomorrow.  [View news story]
    I have no problem with budget fights. THAT'S the time to fight about this stuff, not at debt ceiling votes. If you pass a budget with a deficit, guess what, the debt goes up.
    Aug 1, 2011. 10:42 PM | 2 Likes Like |Link to Comment
  • Democrats and Republicans reportedly reach a tentative agreement on the framework of a deal that would increase the debt ceiling by up to $2.4T and guarantee an equal amount of deficit reduction over the next 10 years.  [View news story]
    Actually, the next milestone is "quadrillion". But I get your point. :-)
    Jul 31, 2011. 01:04 PM | 3 Likes Like |Link to Comment
  • Democrats and Republicans reportedly reach a tentative agreement on the framework of a deal that would increase the debt ceiling by up to $2.4T and guarantee an equal amount of deficit reduction over the next 10 years.  [View news story]
    It's too bad what has happened to the Tea Party. I am DEFINITELY in favor of having a "contingent" that works for fiscal sanity and to shrink down the size of government. Our country badly needs that.

    Very unfortunately, the TP movment got co-opted by opportunistic, telegenic FOOLS (I just can't take you seriously if Sarah Palin and Michelle Bachman are amongst your foremost spokespersons) and an unproductive tone of hysterical shrieking.
    Jul 31, 2011. 11:45 AM | 5 Likes Like |Link to Comment
  • Democrats and Republicans reportedly reach a tentative agreement on the framework of a deal that would increase the debt ceiling by up to $2.4T and guarantee an equal amount of deficit reduction over the next 10 years.  [View news story]
    Hi gents, I agree with much of what both of you have said. The ideal for our national well being would be a combination of a PRODUCTIVE TARGETED short term stimulus with a medium term CREDIBLE REAL deficit reduction once recovery got underway.

    Unfortunately, our politicians are not capable of either.
    Jul 31, 2011. 11:35 AM | 3 Likes Like |Link to Comment
  • Chart of the day: How did we ever come to be over $14T in debt? Who's responsible for how much of it? Who do we owe? This NY Times graphic breaks it down.  [View news story]
    I went directly to some hard data to look at the Clinton years and W years
    www.taxpolicycenter.or...

    These are, of course, the "budget" whereas accumulated debt also is impacted by off-budget items and intergovernmental flim-flam. I do try hard to be intellectually honest about these things, so there is something for everyone:

    In raw numbers: Both spending and receipts rose dramatically under Bush, but of course that accounts neither for a growing economy or inflation. So I think % of GDP is the best way to look at it...

    Clinton avg - receipts 19.03%, budgeted exp 19.81%
    W avg - receipts 17.61%, budgeted exp 19.61%.

    So the problem wasn't the budget expenses under W, it was the big unbudgeted stuff, mainly the wars. So now you look at the tax receipts side. Receipts as % of GDP went DOWN under W, and that's a fact.

    I guess from here, it devolves into a religious argument of hypotheticals -- "it would have been even worse had W not cut taxes" vs. "it would have been much better picture overall if the cuts hadn't happened".
    Jul 30, 2011. 10:45 AM | 1 Like Like |Link to Comment
  • Chart of the day: How did we ever come to be over $14T in debt? Who's responsible for how much of it? Who do we owe? This NY Times graphic breaks it down.  [View news story]
    Well, it was W who led the charge in: 1) cutting taxes, 2) Iraq war, and 3) pandering to older voters with the Medicare prescription benefit.

    But certainly, the Dems didn't do anything to reign in spending.

    Both sides contributed to the GFC in their own way.

    I'm just wondering where all the Reps shrieking about financial ruin were during W's term in office? Why only now during Obama's term?
    Jul 29, 2011. 11:24 PM | Likes Like |Link to Comment
  • Chart of the day: How did we ever come to be over $14T in debt? Who's responsible for how much of it? Who do we owe? This NY Times graphic breaks it down.  [View news story]
    They are merely summarizing data assembled from the sources that they listed. Which sources are you calling into question? I'm sure I could have assembled the exact same chart if I just bothered to look at the sources myself. Hard to see what the conspiracy might be.
    Jul 29, 2011. 10:08 PM | 2 Likes Like |Link to Comment
  • Chart of the day: How did we ever come to be over $14T in debt? Who's responsible for how much of it? Who do we owe? This NY Times graphic breaks it down.  [View news story]
    I do love it so when data exposes hypocrisy.
    Jul 29, 2011. 06:32 PM | 1 Like Like |Link to Comment
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